MCGM nets Rs 11,000 crore as premium from realtors in 2021: Report

The Municipal Corporation of Greater Mumbai (MCGM) saw a massive upsurge in premium collections as it crossed Rs 11,000 crore before the end of December 2021 as against collection of Rs 3,500 crore in 2020, showed a CREDAI MCHI, Colliers and CRE Matrix’s joint report.
The average collection over the past 10 years has been in the range of Rs 3500- 4000 crore, which shot up manifold, the report showed.

The year 2021 saw the highest residential registrations in Mumbai Metropolitan Region (MMR) in recent times at about 2.42 lakh units, a 53% increase from 2020 and a 20% increase even over pre-pandemic year of 2019.

In MMR, the trigger in home sales in 2021 led to 81% on-year rise in stamp duty collections, almost touching 2019 levels.

At the same time, in the financial year 2020-21, property tax collections hit a 10-year high with collections of Rs 5,135 crore meeting 98% of the projected. Property tax is the second biggest source of revenue for the municipal corporation of Greater Mumbai after Goods and Services Tax (GST).

In September 2020, the state government reduced stamp duty charges from 5% to 2% for all residential transactions for the period September to December 2020 and 3% for the subsequent quarter of January - March 2021. Other factors such reduced home loan rates, largely stable prices, pent-up demand and a higher inclination to own home too contributed to a spurt in sales during the year.

“A series of positive actions and continuous encouragement by the Maharashtra government ensured that the real estate sector and the overall economy gets a boost. Premium reductions led to 5 times collections as compared to an average year. Further, the reduction in stamp duty helped in doubling the number of flats sold. Notably, almost Rs 1.30 lakh crore worth of residential flats were sold in the period of October, 2020 to March, 2021,” said Boman Irani, Incoming President of CREDAI-MCHI.

Central Mumbai inclduing Dadar, Lower Parel, Worli, Sewri, Mahim, Matunga, Parel, Wadala saw the maximum revival in sales in 2021. Registrations here rose 93% from 2019 and 71% from 2020. Thane accounted for the highest number of registrations with 42% share, and highest stamp duty collection.

“The numbers show how sops at the right time can boost demand across the segments. The MMR residential market has shown revival led by a host of prevailing factors. In tune, launches also rose 3% in 2021 as developers launched projects to avail the discount premium while the market was on an uptick,” said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.

He believes if the demand persists in a similar trend due led by huge propensity to purchase, the market will see better demand-supply equilibrium in 2022. There could also be a 2-5% increase in prices in the latter half of the year.

Cut in stamp duty provided fillip to affordable and mid segment with apartments priced below Rs 1 crore. Property registrations in these segments rose 22% in 2021, over 2019. Sales in this segment accounted for 39% of the total sales during 2021. Majority of the sales were seen in Thane, with western suburbs a distant second.

Demand in the luxury segment also bounced back after several years. Sales in the luxury segment almost doubled in 2021, compared to 2019. Luxury sales accounted for the highest share in three years, at 28% of the sales in 2021. Majority of the sales were in Central Mumbai, followed by Western Suburbs.